Tale of Two Cities – Part VIII

With a month to go before the deadline, the UK Government has secured the approval of the House of Commons to trigger Article 50 and is now negotiating with the Lords. In Brussels, preparations are underway for the Summit on the future of the EU to coincide with the 60th anniversary of the Treaty of Rome. Theresa May has declined her invitation and the divorce negotiations – yet to be formally started – have already begun to sour over money, among other contentious issues, and are looking set for a rocky start.

Brexit Task Force

The view from London

Oh Lords…

After winning on 8 February the Commons’ authorisation to trigger article 50 by 372 votes, Theresa May made it abundantly clear to the House of Lords that any frustration of the ‘will of the people’ during the passage of the EU (Notification of Withdrawal) Bill would have consequences for the future of the unelected second chamber when she sat in on the opening debate this week. Her official spokesman said this was “in recognition of the importance of this bill as it proceeds through the Lords” but her unusual appearance on the red benches was seen by many as an intimidation tactic.

The debate in the Lords, where the Government does not have a majority, drew record attendance and took place over two days. A significant proportion of the debate was taken up by a discussion on the democratic process and the role of Parliament. In accordance with the convention of permitting Government legislation to pass second reading unheeded, the Bill went through unopposed.

Line by line examination of the Bill is scheduled to start in committee on 27 February and finish on 1 March. No amendments could mean approval by the Lords on 7 March and Royal Assent quickly thereafter. Amendments will result in the Bill ping-ponging between the Commons and the Lords until agreement is reached. Labour’s leader in the Lords has said Opposition peers will not frustrate the process to the point of interfering with the Prime Minister’s intention to trigger Article 50 by the end of March, but the Leader of the Liberal Democrats continues to insist that “there is a world of difference between seeking to block the Bill and seeking to amend it.”

All about the money

The story came full circle as former Prime Minister Tony Blair and Lord Mandelson also decided it was time to issue a rallying cry for Remainers to resist ‘Brexit at any cost’. Mr. Blair faced derision for his choice of timing (more than six months after the referendum) and perception of influence (given his -60 rating on YouGov), but his reference to costs was given weight after Commission President Jean Claude Juncker said Britain would face a ‘hefty bill’ upon Brexit for its outstanding obligations. The Government has yet to publicly respond, but the EU’s insistence that settlement of the bill is a prerequisite for any future deal will have raised hackles at Number 10.

The UK Government also got a boon from Brussels though, as the European Commission revised upwards its 2017 growth forecasts for the UK (following on from a more optimistic forecast from the Bank of England). The Commission expects growth to slow in 2018.

Holding it together?

The unlikely allegiance of sorts formed by the Prime Minister and the Leader of the Opposition, Jeremy Corbyn, after he called on his MPs to back the EU Bill, may soon lose relevance. Stoke-on-Trent Central (which had the highest share of Leave voters in the country) and Copeland by-elections today will be stress-tests for Corbyn, as well as respectively expose UKIP leader Paul Nuttall to internal challenges if he fails to take advantage of Labour’s division, and offer the Conservatives a chance to further augment their majority in Parliament.

Assembly Election Day approaches in Northern Ireland too, the culmination of a divisive campaign where positions on Brexit played no small part. The necessity of negotiating a power-sharing deal increases, especially as tensions regarding the border with Ireland loom. Dublin has already branded as disastrous the inevitable return of some kind of border if the UK leaves the EU Customs Union – and some say that hard measures would even strain the Good Friday Peace Agreement. And in Scotland, where leaving the EU Single Market turned from red line into the unavoidable antechamber of economic distress, rumours of another independence referendum remain in the air. First Minister Nicola Sturgeon will however postpone any definitive announcement to the SNP party conference on 17-18 March.

The view from Brussels

Time is time; money is money

In a technical meeting on 6 February Commission Chief Negotiator Michel Barnier and the EU27 identified the EU budget and equal treatment for UK and EU citizens as key priorities. Barnier also re-affirmed that the sequence of agreeing the withdrawal agreement before discussing any new relationship is crucial, and echoed Commission President Juncker’s scepticismabout the possibility of agreeing on both in the desired time-frame. European Parliament reports have laid bare the scale of the undertaking, which includes brokering agreement on more than 20,000 laws.

Debate is heating up in particular around the cost of Brexit, and whether EU assets (and liabilities) should be factored into the bill delivered to London upon withdrawal. This is expected to amount to €60-70 billion. Leading voices in the Council – read France and Germany – disagree with the Commission’s inclusion of EU assets (worth €154 billion and formally not divided into shares) in budgetary calculations. They are also keen to ensure the UK abides by its full budgetary commitments which run through 2019, a position which will likely unite both net contributors and beneficiaries of the EU budget.

At the end of the tunnel…

Some EU voices welcomed Theresa May’s White Paper published on 2 February, although it added little of substance to the vision laid out in her 17 January speech (considered unrealistic and not very constructive by most EU commentators). The EU position has, however, not changed: non-members must be in a less advantageous position than members. May’s flirtations with Trump amidst the US President’s crackdown on migration – an issue both at the heart of Brexit discussions and highly sensitive especially ahead of elections in the Netherlands and France – drove a further rift between the parties.

Aspirant leaders have evoked Brexit in national election strategies. The French pro-EU candidate Macron vowed a tough negotiation stance and told May the UK could expect no special treatment, while the powerful German Finance Minister dismissed calls to reverse Brexit as tardy attempts proving that Britain is only starting to realise what leaving means.

Conversely, amidst EU fears that the UK could convince some Eastern European states to soften their negotiating stance (with the sweetener of diverted development aid), an Italian Prime Minister with a variable expiry date called for conciliatory talks.

…more tunnels

EU27 leaders will gather on 25 March in Rome for the 60th anniversary of the founding treaty of the EU and the future of the Union. Theresa May has declined to attend, in what is seen in Brussels as another sign of worsening relations (if not as another sign of British “amateurish” and dangerous behaviour).

Meanwhile, security remains a common thread in EU-UK ties, with rumours of David Cameron as the possible next NATO Secretary General (although he would likely find few ardent supporters among EU leaders). Financial services continue to be paramount (Bruegel has argued for an overhaul of the EU financial system). New intricacies continue to add to the Brexit maze, the latest being the risks of the UK leaving Euratom. And the European Court of Justice (ECJ) remains the elephant in the room. The ECJ President has said the Court may judge and modify any Brexit agreement, and European Parliament lead negotiator, Guy Verhofstadt has added that any transitional deal would submit the UK to the ECJ’s jurisdiction.